Business Wire National

July 16, 1985

(BU) YIELDS ON SHORT-TERM Treasury securities rose in Monday`s auctions, reversing two weeks of declines. The Treasury Department sold $7.2 billion in three-month bills at an average discount rate of 7.06 percent, up from last week`s 6.92 percent. Another $7.2 billion was sold in six-month bills at an average discount rate of 7.20 percent, up from 7 percent last week. The three- month rate was the highest since a 7.21 percent average on June 10. The six-month rate was the highest since 7.24 percent on June 24. The new Treasury bill discount rates understate the actual return to investors -- 7.29 percent for three-month bills and 7.58 percent for six-month bills.

(BU) DOMESTIC CAR SALES fell 14.9 percent in early July compared with a year ago, and analysts saw further evidence of a weakening new-car market, according to company reports Monday. Analysts at the companies and on Wall Street pointed out that the July 1-10 period a year ago was so strong that a decline for the period this year was inevitable. Nevertheless, Chrysler Corp. announced Monday a $400 rebate program on its Dodge Aries-Plymouth Reliant compact cars, and the trade journal Automotive News said dealer stocks were at a four-month high. Sales of imported cars have been rising as those of domestic makes fall, a trend that analysts say will continue for the remainder of the year and which will eat away at domestic car sales. Importers report sales only once a month, so a domestic-import comparison for July 1-10 wasn`t available.

(BU) AMERICANS TOOK ON $9 billion more in installment debt than they paid off in May, the government reported Monday. The Federal Reserve Board said the May increase was slightly higher than the $8.3 billion rise in consumer debt in April. Since last May, the total amount of consumer debt outstanding has risen from $405.3 billion to $488.7 billion, an increase of 20.6 percent. Auto loans increased by $3.79 billion in May, compared to an April gain of $3.49 billion. Cash loans from banks and other short- and medium-term personal debt rose by $2.64 billion in May, up from an April increase of $2.44 billion. Revolving credit including credit cards showed an increase of $2.43 billion, compared to an April gain of $2.13 billion.

(BU) MORTGAGE RATES rates fell sharply in early June, posting the largest month-to-month decline in more than two years, the government said Monday. The Federal Home Loan Bank Board reported that fixed-rate mortgages averaged 12.86 percent in early June, down from 13.49 percent in May. The 12.86 percent level was based on a loan of at least 25 years for a new home with a 25 percent downpayment. The May-June decline, almost twice the size of the April-May drop, was the largest since late 1982, the bank board said. Analysts said that mortgage rates, which have generally been falling since last summer, are now at their lowest levels in five years. Warren Lasko, executive director of the Mortgage Bankers Association, said he expected the bank board`s figures for early July would show that fixed-rate mortgages have dropped even more, to around 12.25 percent. While he did not forecast any further declines from the 12 to 12.25 percent level, he said this range would be enough to boost housing sales in coming months.

(BU) NEW-HOME PRICES in South Florida are close to the national average for metropolitan areas, according to Census Bureau figures for 1984 and local figures collected from area legal records. The average price paid last year for a new single-family house in a metropolitan area was $101,200, compared with $100,766 in Palm Beach County, $91,780 in Broward County and $91,815 in Dade County.

(BU) BUSINESS INVENTORIES fell 0.4 percent in May, the steepest decline in more than two years, while sales posted a modest gain, the Commerce Department said Monday. Business stockpiles on shelves and in backlots totaled $577.9 billion in May, down from an April total of $580.2 billion. The decline, the sharpest since a 0.6 percent drop in March 1983, came as sales rose a moderate 0.2 percent for the month. Declining inventory levels at a time of rising sales gave some economists hope that the economy may begin to exhibit renewed strength in coming months as businesses step up production to replace depleted inventories. The department also noted that the ratio of inventories to sales fell slightly in May and has stayed at historically low levels throughout the current recovery. In May, the ratio dropped 0.01 from April, to 1.35. This meant it would take 1.35 months to deplete existing inventories at the May sales pace. From 1977 through 1982, the ratio averaged around 1.5 months.